Newly-published evidence showed allegations by George Osborne last week that Labour was involved in the rate-fixing scandal were unfounded.

A paper prepared by UBS for the Treasury in 2008, published by the Financial Times, suggested only 'legitimate policy improvements' to improve the operation of a credit guarantee policy, the Opposition said.

And identical concerns about the effects on the inter-bank lending rate of the £250billion scheme were even raised soon afterwards by the Conservative Opposition, they pointed out.

Attack: Chancellor George Osborne in the House of Commons in debate with his opposite number Ed Balls last Thursday

Mr Osborne cited the report during
angry Commons clashes on Thursday after he said former prime minister
Gordon Brown's inner circle had 'questions to answer' over apparent
pressure on Barclays to post lower rates.

'They were clearly involved and we
just haven't heard the full facts, I don't think, of who knew what
when', he told the Spectator magazine ahead of the debate

It came after ex-Barclays boss Bob
Diamond revealed he had been warned by Bank of England deputy governor
Paul Tucker in October 2008 in a phone call about concerns among senior
Whitehall figures about the bank's high rates.

Baroness Shriti Vadera, a former UBS
employee made a minister by Mr Brown, has said she commented on the note
'to focus the issues on the lending conditions in the real economy for
real people.'

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But she strongly denies speaking to Mr
Tucker - who will give evidence about the call to the Treasury select
committee on Monday - about Libor rates or making any inappropriate
suggestions.

The November 1 note titled 'Reducing
Libor, Improving Lending Conditions' suggested the rate would 'fall
significantly quicker' if the credit scheme could be made to work
better, suggesting a cut in fees.

On November 10, Philip Hammond - then
number two in Mr Osborne's shadow treasury team - told MPs that if the
credit guarantee scheme had worked properly 'Libor rates would have
fallen by 1.5 per cent last Friday'.

Calling for a public apology from the
Chancellor, shadow financial secretary Chris Leslie said: 'Everybody can
now read for themselves the advice to the Treasury from UBS bank in
2008 which the Government has this week insinuated is about the
deliberate manipulation of the Libor rate.

'In fact, the note simply proposes
legitimate policy improvements to the Government's credit guarantee
scheme in order to reduce inter-bank lending costs during the credit
crunch.

'This was at a time when...Philip
Hammond was complaining that Libor had not fallen sufficiently as a
result of that very credit guarantee scheme. There is absolutely nothing
in this note about the deliberate fixing of the Libor rate, which
Barclays traders were involved in. George Osborne did not have a shred
of evidence for the false allegations he threw around this week and
which his aides have now withdrawn.

'It's time the Chancellor had the
integrity to do so himself publicly and started getting on with the day
job of getting Britain out of his double-dip recession.'